HomeReady & Home Possible Loans in NC and SC

There’s no place like home, and there’s no home like one you own. But achieving homeownership can feel unattainable for many would-be buyers. With hurdles like large down payments and high credit score requirements, securing a conventional mortgage isn’t an option for everyone. That rings especially true for those with low-to-moderate incomes or below-average credit scores. 

However, loans like HomeReady and Home Possible make it possible for all kinds of buyers to secure mortgages—and the keys to their very own home. With lower down payments and looser credit score requirements, these loans are great options for homebuyers who fall outside those other stringent requirements. 

If you’re ready to begin your home-buying journey with a HomeReady or Home Possible loan, you’ll need a mortgage lender, but what you’ll want is an expert mortgage coach to help you navigate the whole process. At Dash, we work one-on-one with every client to help you choose the right loan, efficiently complete the process, and close as expected—guaranteed. 

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What are Home Possible & HomeReady Loans?

Home Possible and HomeReady loans are government-sponsored enterprises (GSEs). GSEs are privately held agencies that Congress established to improve credit flow. 

GSEs don’t back their own loans. Instead, they buy mortgages from lenders, which are then held in their portfolios or sold via mortgage-backed securities. 

It sounds complicated, but the important takeaway for you as a homebuyer is this: GSEs make the national mortgage market more stable and affordable. Hence, Home Possible and HomeReady. 

Home Possible and HomeReady are mortgage programs designed for potential buyers with lower incomes and lower credit scores. They allow buyers to purchase a home without saving up a 20% down payment or raising their credit scores to 740 or above. 

So what’s the difference? 

Home Possible Loans

Home Possible is a mortgage program backed by the Federal Home Loan Mortgage Corporation—ie, Freddie Mac. It’s aimed at homebuyers with low-to-moderate income, and it requires a down payment of just 3% (that’s significantly more attainable than the 20% required by most conventional mortgages). 

The program is also geared toward buyers with low credit scores, usually 660 or above. However, those without a credit history—and therefore without a credit score—may also qualify for a Home Possible loan with a down payment of 5%. 

It’s important to note that you will have to pay private mortgage insurance (PMI) with a Home Possible loan until its balance reaches 80% or less of the home’s value. 

Who Is Home Possible For? 

Home Possible loans are best for buyers who: 

• Aren’t able to save up a large down payment
• Make 80% or less of the local area median income
• Have a credit score of 660 or higher
• Are first time buyers OR experienced homeowners

HomeReady Loans

HomeReady is GSE-backed a mortgage program. Like Home Possible, HomeReady is designed for homebuyers with lower incomes. With a minimum down payment of just 3%, it’s designed for those who can’t save up the 20% down payments required by conventional loans. 

The greatest differentiator between HomeReady and Home Possible loans is that HomeReady’s requirements for credit scores are even more flexible. Applicants just need a credit score of 620 or higher. 

As with Home Possible and even conventional loans, you will have to pay private mortgage insurance (PMI) with a Home Possible loan until its balance reaches 80% or less of the home’s value.

Who Is HomeReady For? 

HomeReady loans are best for buyers who: 

• Aren’t able to save up a large down payment
• Make 80% or less of the local area median income
• Have a credit score of 620 or higher
• Are first time buyers OR experienced homeowners

Benefits of HomeReady and Home Possible Loans

• Low down payment
• Lower credit score requirements
• PMI cancellation once loan balance reaches 80% or less of home value 
• Can accept monetary gifts to help with down payment 
• Can be used to refinance 
• Can be an experienced or new homeowner 
• Accessible to low-to-moderate income buyers

Requirements for HomeReady and Home Possible Loans in NC & SC

The requirements for HomeReady and Home Possible loans are very different from what you might find with conventional loans. 

Income Limitations

Rather than income requirements, both loans do have income limitations, which means homebuyers cannot make more than a certain amount annually in order to qualify. 

With both HomeReady and Home Possible loans, the buyer cannot make more than 80% of the area median income (AMI) for the area in which they’re buying. You can use the Fannie Mae AMI lookup tool to determine the AMI for your area. 

Down Payment Requirements

Buyers must make a down payment of at least 3% of the cost of the home. In addition to being significantly lower than conventional down payment requirements, these loan programs are also more flexible regarding the source of your down payment. It can come from your own savings, as well as a gift from a friend or family member or a grant. 

Homeownership Education Course

If you are a first-time buyer (or, in the case of Home Possible, if you do not have a credit score), you must complete a homeownership education course. 

If you choose the HomeReady program, you must take their Framework homeownership education program. With the Home Possible program, you’ll need to finish a CreditSmart course or another course offered through a housing finance agency or a counseling agency approved by HUD.

Pros & Cons of HomeReady and Home Possible Loans

As with any loan, there are advantages and disadvantages to both the HomeReady and Home Possible programs. Depending on your income, credit score, and other factors, the pros may outweigh the cons. 

Pros 

• Accessible to low-to-moderate income buyers
• Credit score requirements are lower
• Can use gifts or grants for down payment
• No first-time homeowner requirement
• Available for refinancing 

Cons 

• Not accessible to homebuyers with income higher than 80% AMI
• Requires private mortgage insurance 
• Must not own any other residences in the US
• Higher interest rates 

How to Apply for a HomeReady or Home Possible Loan

So you’re ready to say hello to home sweet home, and you think a HomeReady or Home Possible loan is the way to do it? Here’s what you can expect: 

Step 1: Consider Your Options

You should do plenty of research before you decide on any loan, including a HomeReady or Home Possible loan. While the low down payment and credit score requirements make these pretty sweet options, they do come with a higher interest rate than conventional loans. 

Depending on your circumstances, there may be another mortgage option that’s better for you. You can research your options on your own, or tap a Dash Mortgage Coach for help figuring out which loan is best for you. 

And if you do choose HomeReady or Home Possible, be sure you meet the requirements outlined above. 

Step 2: Recruit a Lender (Like Dash!) 

While HomeReady and Home Possible are GSEs, you can’t apply for the loans through GSEs (remember, they buy loans from other lenders). Instead, you’ll need to find an outside lender to service your HomeReady or Home Possible loan. 

Not all lenders service these loans—but we do. Our Mortgage Coaches can ensure you’re choosing the right loan for your situation, then help you process it efficiently and easily. 

Step 3: Apply for Your HomeReady or Home Possible Loan

Once you choose a lender, you’ll submit your application. You’ll also need to submit documents, like your taxes, that verify your income. 

Your lender will review these materials and decide whether or not you qualify. If you do, they’ll set your interest rate and your loan amount. Then it’s time to go house hunting! 

Work with Dash to Secure a HomeReady or Home Possible Loan

There are plenty of mortgage lenders, but none quite like Dash. That’s because we skip the middlemen and pair you with your own Mortgage Coach to help you every step of the way. Plus, we use technology to work super fast and offer the Dash Loan Closing Guarantee. 

Ready to get started? So are we. 

HomeReady and Home Possible FAQs

We know mortgages are complicated, even mortgage programs like HomeReady and Home Possible that are designed to make things easier. Consider Dash your homebuying guru—we’re here to answer all your questions, including these: 

What’s the difference between HomeReady and Home Possible?

HomeReady and Home Possible are very similar in terms of requirements, but HomeReady is a little more flexible. The program’s credit score requirement is lower (620).

Do you have to be a first-time home buyer for HomeReady or Home Possible?

No, you do not have to be a first-time homebuyer to qualify for a HomeReady or Home Possible loan. If you are a first-time homebuyer, you will need to complete a homeowner education course to qualify for either program. 

How much do I need to put down on a HomeReady or Home Possible mortgage?

Both HomeReady and Home Possible loans require a minimum down payments of 3% of the cost of the home. 

Are HomeReady and Home Possible available for all homes?

HomeReady and Home Possible loans are designed for single-family, single-unit homes. You can also use one of these loans on a two- to four-unit home as long as your primary residence will be in one of the units.